1. Mandate
The issuer appoints one or more banks as lead managers or bookrunners. Larger deals may involve a wider syndicate of co-managers.
2. Documentation
Lawyers prepare a prospectus or offering circular describing the issuer, the risks and the terms and conditions of the bond. Frequent issuers often use a Euro Medium Term Note (EMTN) programme: a base prospectus is approved once and individual bonds are issued under it with short "final terms" documents. A fiscal agent or trustee and a paying agent are appointed.
3. Credit ratings
Most issues are rated by one or more agencies such as S&P Global, Moody's or Fitch. The rating strongly influences who can buy the bond and at what yield.
4. Marketing
For a debut issuer or a large deal the banks arrange a roadshow or investor calls so that the issuer can present its business and credit story.
5. Bookbuilding and pricing
On the launch day the bookrunners announce initial price thoughts, usually as a spread over a benchmark such as mid-swaps or a government bond. Investors place orders, the book grows, guidance is tightened and the final spread and coupon are set. Many deals are launched and priced within a single day.
6. Allocation
If the book is oversubscribed, the bonds are allocated among investors, generally favouring long-term holders.
7. Closing and settlement
A few business days later the deal closes: the issuer receives the money and the bonds are delivered to investors through Euroclear and Clearstream. The bond receives an ISIN code, often beginning with "XS", and may be admitted to listing on an exchange.
8. Secondary trading
From that point the bond trades over the counter between dealers and investors until it matures or is redeemed early.